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BY NATHAN BYRNE
Pandora refuses to be boxed in — as the Internet radio giant might’ve found a way to kiss its ASCAP troubles goodbye.
What’s ASCAP? It’s the American Society of Composers, Authors and Publishers.
You know, the organization that collects performance-rights royalties from radio stations and, yes — from Pandora. (Via WJW)
But Pandora hasn’t been crazy about the payment process. The music-streaming company says it’s being discriminated against — claiming ASCAP is “ … charging it higher royalty rates, as well as letting publishers pull their song catalogs from Pandora while keeping them available for competitors.” (Via CNN)
So, how’s Pandora dealing with that? By buying a local radio station in the country’s 255th largest market.
It’s not known how much Pandora paid for KXMZ in Rapid City, S.D. and its estimated 18,000 listeners. But a writer for CNET says it’s clearly not an audience grab for the 70-million-listener-per-month Pandora.
“Pandora pays two royalty streams, one for actual sound recordings and another to composers for publishing rights. … by buying a terrestrial station, Pandora piggybacks onto a settlement that gives better rates on that smaller fee stream.”
According to Fox Business, Clear Channel-owned iHeartRadio benefits from a similar arrangement — because its parent company owns 800 radio stations.
BGR reports Pandora has actually filed a motion in federal court alleging discrimination by ASCAP — because 16 of the top 20 internet radio providers are able to get the license that Pandora hasn’t previously been granted.
It’s an adjustable-fee blanket license born out of a 2012 settlement between ASCAP and the Radio Music Licensing Committee — or RMLC.
A writer for Billboard explains it’s a blanket license because the settlement extends to Internet performance royalties. He suggests “A shift to RMLC rates would represent big savings … ASCAP has not given Pandora either the RMLC's percent-of-revenue royalty rate or the 25% standard deduction available to Internet radio services.”
It hasn’t taken long for a war of words to ensue in and around the music industry. The Hill’s Christopher Harrison wrote an op-ed on why Pandora did what it did.
Harrison said ASCAP has violated its antitrust decree, writing: “ … we have encountered many attempts by the incumbent industry players to undermine Pandora’s mission to connect millions of fans with the music and artists they love. These organizations seek to impose unprecedented royalty increases that are neither reasonable nor competitive.”
And ASCAP’s president, Paul Williams, fired back: “Songwriters and composers are struggling in the digital economy to be paid fairly for their creative work. Pandora is trying every trick in the book to brazenly and unconscionably underpay and take advantage of the creative labor that produces the core offering of their business – music written by individual songwriters and composers.”
A Pandora spokesperson told The Wall Street Journal KXMZ was the cheapest station the company could find. In a regulatory filing Tuesday, Pandora estimated the move would save it about 1 percent in revenue. Reported by Newsy 2 days ago.